October 29, 2010 - The maker of the popular cigarette brands Philip Morris and Marlboro, PMFTC Inc., has urged the government to extend the expiring sin tax law by another five to six years instead of restructuring it. (This company, formed last February 2010 is aptly called PMFTC, which combines the initials of Philip Morris Philippines Manufacturing Inc. (PMPI) and Fortune Tobacco Corp. (FTC). Philippines - PMFTC has 90% of the tobacco market..)

Chris Nelson, PMFTC president explained that the government's revenues from the existing sin tax law, which allows an excise tax rate hike every two years, have been increasing and also a “success.” “Why discuss the restructuring when the law is proving to be successful?”

The current law, Republic Act (RA) 9334, is expiring in 2011, which is sending legislators to scramble for their own House measures seeking to replace the old one.

As a proof of the sin tax law's success, Nelson noted that excise tax collection on tobacco products surpassed the government's target of P1.58 billion for September by 80 percent to P2.84 billion - 1.00 PHP = 0.0233 USD).

He also cited that government has collected P22.14 billion in revenues from tobacco products in January to September, which was 16 percent more than the target of P19.01 billion.

“Tobacco industry has given increases every two years. Why not focus on other areas that are declining because of [tax] leakages,” Nelson added. He also reminded that the campaign promise of President Aquino that he would not slap new taxes during his six-year presidency.

The NEDA is now under fire in the House of Representatives (House) for its proposal to impose new taxes, which would entail, among others, the restructuring of excise taxes on alcohol and tobacco products, to “meet fiscal balance in a sustained manner.” Rep. Victor Ortega said NEDA's proposal which will result in the adoption of a unitary rate for tobacco products is “highly oppressive” particularly for the tobacco industry, which has been generating income that is even beyond the government’s expected target. (CSL)